Jeffrey Kolitch, 44, is a real-estate thoroughbred: The son of a developer, he majored in real estate at the Wharton School of Business and now steers the $503 million Baron Real Estate fund (ticker: BREFX), which beat 99% of its peers in the past year and 96% in the past three years.

"My father owned a small, private, retail home-center firm, which sold everything from carpets to nails, but he transitioned into real-estate development when he became concerned that he wouldn't be able to compete with companies like...